Why is an IRS Form 5498 Arriving in May?

Tax calendar

Why is an IRS Form 5498 arriving in May? You just gathered all your forms two months ago and now a new one arrives after the deadline. What gives? Do you have to call your accountant again?

Hold the calls. You may remember reporting to your accountant (or TurboTax) that you made some contributions to an HSA or IRA. Perhaps you made them last year, or perhaps you made them before the April 2024 deadline and had them count for 2023. Or, you took money out of these accounts, or are getting ready to start your required minimum distributions (RMDs).

These are reasons why you are receiving the form.

What’s Form 5498 for?

One purpose of the Form 5498 is for the financial institution that holds your account (called a “custodian”) to verify to the IRS that you did indeed make the contribution that you claim you did on your tax return.

Since everyone usually has until the tax filing deadline to make contributions, the IRS gives custodians until May 31 to send Form 5498 to account holders.

Another is to verify distributions. If you are over the age for required minimum distributions (RMDs), Form 5498 also tells the IRS what your RMD will be for the current year. The RMD is determined by the account balance on the final day of the previous year (December 31, 2023 for 2024).

What you need to do with the form is check that what’s reported on the form matches up with what actually happened and also with what you actually reported on your return.

Check Form 5498 For Errors

Seriously, make sure it’s correct. Mistakes are common.

In 2018, my husband and I both received erroneous 5498’s for our Health Savings Accounts (HSAs). Mine showed $0 contributions for 2017 and his showed 2 years’ worth. What the….? So we called the bank, got the records straight, and had them send corrected 5498s to the IRS.

Why go to the trouble? If your 5498 contribution or distribution differs from what you reported on your 1040, at some point it could get noticed. One fantastic sunny day after skipping down to your mailbox, you may find inside a skinny white envelope with “Internal Revenue Service” in the return address. Fantastic day ruined.

More than likely, all the letter will say is, “Hey, we noticed your 5498 doesn’t match your 1040. Whassup?” But still. It will be in IRS-Speak and look and sound and feel serious, with a deadline for giving them an answer. Save yourself the trouble of having to answer (or pay your accountant to answer for you) and do a quick check now.

It only takes a few minutes.

  • Does your contribution amount for 2023 look correct?
  • Did you take any 2023 HSA or IRA distributions, and if so, do those look correct?
  • (If not, make sure the distributions say $0.)
  • Does the reported year-end account balance look accurate?
  • Is your SSN correct?
  • How about your name, including your middle initial?

If anything looks amiss, contact your custodian to get a corrected 5498 issued ASAP.

One More Tax Task

By this time of year, it’s normal to feel sick of tax stuff. The last thing you may want to do is deal with another form, especially an erroneous one. If you don’t want the bother, at least forward it to your financial or tax professional to check it out and help. We deal with tax stuff all year long. Even in May.

If it feels like you could be paying less in taxes, start by subscribing to our award-winning monthly e-letter, “The View From the Porch” for monthly tax tips sprinkled with fun and reader-only event offerings. Or schedule a 30-minute call to talk more about your concerns.

Holly Donaldson

Holly Donaldson, CFP® runs an hourly and fee-for-service financial planning practice virtually from her Tampa Bay, Florida office. She also works with clients throughout the U.S. (except Texas) interested in retirement and tax planning advice without product sales or investment management. Holly is the author of The Mindful Money Mentality: How to Find Balance in Your Financial Future (Porchview Publishing, 2013) and publisher of the award-winning monthly e-letter, "The View From the Porch."

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